Miller v. Bank of America, TA et al

Filing 20

ORDER granting defendants' Unopposed Motions to Dismiss ( 15 , 17 ) with prejudice. Signed by Judge Anthony J. Battaglia on 4/19/16. (kas)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 SHAWN C. MILLER, Case No.: 15cv02701 AJB (MDD) Plaintiff, 12 13 14 ORDER GRANTING DEFENDANTS’ UNOPPOSED MOTIONS TO DISMISS v. BANK OF AMERICA, N.A.; MTC FINANCIAL dba TRUSTEE CORPS.; and DOES 1 through 100, inclusive, 15 16 (Doc. Nos. 15, 17) Defendants. 17 18 19 20 Defendants Bank of America, N.A. (“Bank of America”) and MTC Financial dba 21 Trustee Corps. (“MTC”) (collectively “Defendants”) have filed motions to dismiss 22 plaintiff Shawn C. Miller’s (“Plaintiff”) first amended complaint, (Doc. No. 10), in its 23 entirety pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. No. 15, 17.) Upon 24 review of the motions, the Court finds them suitable for determination on the papers and 25 without oral argument pursuant to Local Rule 7.1.d.1. Accordingly, the motion hearing 26 set for May 12, 2016 at 2:00 p.m. in Courtroom 3B is vacated. As set before more fully 27 below, Defendants’ unopposed motions to dismiss are GRANTED. 28 /// 1 15cv02701 1 2 I. BACKGROUND The following facts are taken from Plaintiff’s first amended complaint and are 3 accepted as true by the Court for the limited purpose of resolving the instant motions. See 4 Vasquez v. L.A. Cnty., 487 F.3d 1246, 1249 (9th Cir. 2007). 5 At all relevant times, Plaintiff owned a single-family residence located at 304 6 Kolmar Street, La Jolla, California (“La Jolla Property”). (Doc. No. 10 ¶ 6.) On June 16, 7 2005, Plaintiff obtained a subprime loan for $1,300,000 from Bank of America. (Id. at ¶ 8 11.) Defendants prepared written documentation of Plaintiff’s income, prepared a 9 uniform residential loan application, and provided Plaintiff with unsigned copies of the 10 application. (Id. at ¶ 13.) The loan documents prepared by Defendants erroneously 11 overstated Plaintiff’s monthly gross and net income by not accounting for any basic 12 living expenses. (Id. at ¶¶ 14, 23.) Due to this error, a fully amortized payment on the 13 loan exceeded Plaintiff’s income and repayment of the loan was not feasible. (Id. at ¶ 23.) 14 Plaintiff executed the loan documents before a notary public. (Id. at ¶ 24.) Upon 15 obtaining the loan, Plaintiff was not advised that the La Jolla Property appraisal had been 16 inflated to secure both a first and second note and deed of trust. (Id. at ¶ 28.) 17 Additionally, despite being told he would not be charged prepaid finance charges, 18 Plaintiff was charged excessive fees at the close of escrow. (Id. at ¶ 17.) 19 On December 20, 2007, Defendants provided Plaintiff with an unsigned federal 20 truth in lending disclosure statement, which did not include repayment terms. (Id. at ¶ 21 16.) Plaintiff attempted to negotiate multiple settlement agreements with agents of Bank 22 of America and mailed a loan modification package to Bank of America with a 23 refundable deposit of $65,000. (Id. at ¶ 29.) Defendants arbitrarily refused to agree to 24 proposed repayment terms or to negotiate an agreement, and rejected Plaintiff’s request 25 for a long-term and affordable loan modification program. (Id. at ¶ 30.) On March 26, 26 2012, Defendants recorded a notice of default and initiated foreclosure proceedings 27 against Plaintiff. (Id. at ¶ 31.) Prior to initiating foreclosure proceedings, Defendants 28 failed to provide any loan modifications or loan counseling to Plaintiff. (Id.) 2 15cv02701 1 On December 2, 2015, Plaintiff filed his original complaint. (Doc. No. 1.) On 2 January 26, 2016, Defendant Bank of America filed a motion to dismiss Plaintiff’s 3 complaint, (Doc. No. 4), which was followed by MTC’s motion to dismiss on January 27, 4 2015, (Doc. No. 6). Plaintiff thereafter amended his complaint and the Court denied the 5 motions to dismiss as moot. (See Doc. Nos. 8, 9.) After Plaintiff filed a first amended 6 complaint, Defendants again moved to dismiss Plaintiff’s claims. (Doc. Nos. 15, 17.) 7 MTC also filed a request for judicial notice. (Doc. No. 17-2.) To date, Plaintiff has not 8 filed an opposition to either pending motion to dismiss. 9 II. LEGAL STANDARDS 10 A. 11 A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of a plaintiff’s Motion to Dismiss 12 complaint. See Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). “A court may 13 dismiss a complaint as a matter of law for (1) lack of cognizable legal theory or (2) 14 insufficient facts under a cognizable legal claim.” SmileCare Dental Grp. V. Delta Dental 15 Plan of Cal., 88 F.3d 780, 783 (9th Cir. 1996) (internal citation omitted). However, a 16 complaint will survive a motion to dismiss if it contains “enough facts to state a claim to 17 relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). 18 In making this determination, a court reviews the contents of the complaint, accepting all 19 factual allegations as true, and drawing all reasonable inferences in favor of the 20 nonmoving party. Cedars-Sinai Med. Ctr. V. Nat’l League of Postmasters, 497 F.3d 972, 21 975 (9th Cir. 2007). Notwithstanding this deference, the reviewing court need not accept 22 legal conclusions as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). It is also improper 23 for a court to assume “the [plaintiff] can prove facts that [he or she] has not alleged.” 24 Associated General Contractors v. Cal. State Council of Carpenters, 459 U.S. 519, 526 25 (1983). However, “[w]hen there are well-pleaded factual allegations, a court should 26 assume their veracity and then determine whether they plausibly give rise to an 27 entitlement to relief.” Iqbal, 556 U.S. at 679. 28 /// 3 15cv02701 1 B. 2 Generally, a district court’s review on a motion to dismiss is limited to the 3 complaint. Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001). However, “a 4 court may take judicial notice of matters of public record,” id. at 689 (internal quotations 5 and citations omitted), and of “documents whose contents are alleged in a complaint and 6 whose authenticity no party questions,” Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 7 1994), overruled on other grounds by Gailbraith v. Cnty. Of Santa Clara, 307 F.3d 1119 8 (9th Cir. 2002). Pursuant to Federal Rule of Evidence 201, a court may take judicial 9 notice of an adjudicative fact not subject to “reasonable dispute,” that is “generally Judicial Notice 10 known within the territorial jurisdiction of the trial court” or is “capable of accurate and 11 ready determination by resort to sources whose accuracy cannot reasonably be 12 questioned.” Courts may properly consider judicially noticed facts on a motion to dismiss 13 without converting the motion into one for summary judgment. Mullis v. United States 14 Bankr. Ct., 828 F.2d 1385, 1388 (9th Cir. 1987). 15 III. DISCUSSION MTC’s Request for Judicial Notice 16 A. 17 MTC requests the Court take judicial notice of certain public records relating to 18 Plaintiff’s first amended complaint. (Doc. No. 17-2.) The public records include a deed of 19 trust, (Doc. No. 17-2, Exh. A), an assignment of deed of trust, (Doc. 17-2, Exh. B), a 20 corporation assignment of deed of trust/mortgage, (Doc. No. 17-2, Exh. C), a notice of 21 default, (Doc No. 17-2, Exh. D), a substitution of trustee, (Doc. No. 17-2, Exh. E), and a 22 notice of trustee’s sale, (Doc. No. 17-2, Exh. F). Plaintiff has not objected to the 23 authenticity of any of the preceding documents, and attaches two of these documents to 24 his first amended complaint. (See Doc. 10, Exhs. A, B.) The documents MTC requests 25 judicial notice of are properly recorded documents from the San Diego County 26 Recorder’s Office, the authenticity of which cannot reasonably be questioned. 27 Accordingly, the Court may properly consider those documents in ruling on Defendants’ 28 motions. MTS’s request is therefore GRANTED. (Doc. No. 17-2.) 4 15cv02701 Defendants’ Motions to Dismiss 1 B. 2 Plaintiff’s first amended complaint asserts three causes of action, alleging (1) 3 California’s non-judicial foreclosure scheme violates the Due Process Clause of the 4 Fourteenth Amendment; (2) Defendants violated Plaintiff’s due process rights by seizing 5 and transferring title to the property without affording Plaintiff adequate notice and an 6 opportunity to be heard; and (3) Bank of America violated Plaintiff’s rights under the 7 Equal Protection Clause by discriminating against individuals who have filed for 8 bankruptcy. (See Doc. No. 10.) Although not referenced in the first amended complaint, 9 Defendants challenge Plaintiff’s causes of action as though brought under 42 U.S.C. § 10 1983.1 Defendants contend Plaintiff fails to state a claim because courts have rejected the 11 argument that California’s non-judicial foreclosure scheme violates due process. (Doc. 12 Nos. 15-1 at 6; 17-1 at 10.) Similarly, Defendants argue they are not state actors and 13 therefore Plaintiff cannot state a claim under the Fourteenth Amendment. (Doc. Nos. 15- 14 1 at 6–7; 17-1 at 9–13.) 15 “Section 1983 imposes civil liability upon an individual who under color of state 16 law subjects or causes, any citizen of the United States to the deprivation of any rights, 17 privileges or immunities secured by the Constitution and laws.” Franklin v. Fox, 312 18 19 MTC’s motion to dismiss argues that Plaintiff incorrectly relies on §§ 1331 and 1343 for jurisdiction, when Plaintiff’s claims are more appropriately brought under § 1983. (Doc. No. 17-1 at 8.) Neither Defendant challenges the Court’s subject matter jurisdiction over Plaintiff’s claims. However, the Court does construe Plaintiff’s allegations as an attempt to assert a violation of § 1983. See Kuder v. Haas, No. 2:10CV00404, 2010 WL 4983455, at *5 (E.D. Cal. Dec. 2, 2010), report and recommendation adopted, No. 2:10CV00404, 2011 WL 346442 (E.D. Cal. Feb. 1, 2011) (“Plaintiff’s allegations of violations of his Fourteenth Amendment due process rights as a result of the non-judicial foreclosure and sale of his property necessarily allege a violation 42 U.S.C. § 1983.”); see also Bellinger v. Wells Fargo Bank, N.A., No. 1:14CV01076, 2014 WL 6389581, at *4 (E.D. Cal. Nov. 14, 2014) (“Causes of action for purported constitutional violations, as alleged here by Plaintiff, must be brought pursuant to 42 U.S.C. § 1983.”). 1 20 21 22 23 24 25 26 27 28 5 15cv02701 1 F.3d 423, 444 (9th Cir. 2002) (citing 42 U.S.C. § 1983). “To state a claim under § 1983, a 2 plaintiff must allege two essential elements: (1) that a right secured by the Constitution or 3 laws of the United States was violated, and (2) that the alleged violation was committed 4 by a person acting under the color of State law.” Long v. County of Los Angeles, 442 F.3d 5 1178, 1185 (9th Cir. 2006). It is well-settled law that non-judicial foreclosure 6 proceedings do not involve “state action,” even though such proceedings are regulated by 7 state law. See Apao v. Bank of New York, 324 F.3d 1091 (9th Cir. 2003). 8 9 Plaintiff alleges that Defendants, which are private entities, violated his Fourteenth Amendment due process rights by proceeding with non-judicial foreclosure on his 10 property. The Ninth Circuit Court of Appeals has held that a private entity’s use of a 11 state’s non-judicial foreclosure procedures does not constitute state action sufficient to 12 support a claim of a violation of Fourteenth Amendment due process rights under § 1983. 13 Id. at 1095 (holding that private entities’ foreclosure and sale of plaintiff’s property 14 through use of Hawaii’s non-judicial foreclosure sale did not involve state action 15 sufficient to support a claimed violation of Fourteenth Amendment due process rights); 16 see also Nieves v. World Savings Bank, FSB, 357 Fed. Appx. 843, 844 (9th Cir. 2009) 17 (holding that the defendant bank did not violate plaintiff’s due process rights by 18 proceeding with a non-judicial foreclosure sale of his property). 19 Thus, courts have rejected the proposition advanced by Plaintiff, namely that a 20 state’s non-judicial foreclosure process constitutes state action. See, e.g., Tran v. 21 Nationstar Mortgage LLC, No. 5:15CV05126, 2016 WL 1535081, at *3 (N.D. Cal. Apr. 22 15, 2016) (“It is been held by both the California Supreme Court and the Ninth Circuit 23 Court of Appeals that a state’s non-judicial foreclosure process does not constitute state 24 action and does not implicate constitutional due process protections.”); Smiley v. JP 25 Morgan Chase, No. 14CV01651, 2015 WL 217258, at *4 (N.D. Cal. Jan. 15, 2015) (“In 26 the foreclosure context in California, it is well-settled law that non-judicial foreclosure 27 proceedings do not involve ‘state action,’ even though such proceedings are regulated by 28 state law.”) (internal citation and quotation marks omitted); Bellinger, 2014 WL 6 15cv02701 1 6389581, at *5 (citing cases for the same proposition). Plaintiff has not alleged that 2 Defendants are state actors, and as Defendants are private entities, cannot satisfy the 3 pleading requirements for a § 1983 claim. Moreover, even if Plaintiff could plausibly 4 allege Defendants were state actors, non-judicial foreclosure does not constitute state 5 action. Accordingly, Plaintiff’s claims under the Fourteenth Amendment fail as a matter 6 of law. Defendants’ motions to dismiss are GRANTED. 7 C. Having granted Defendants’ motions to dismiss, the Court must consider whether 8 9 Leave to Amend to grant Plaintiff leave to file a second amended complaint. Rule 15(a) of the Federal 10 Rules of Civil Procedure governs leave to amend, and provides that courts should freely 11 give leave to amend when justice so requires. Although generally applied with “extreme 12 liberality,” a court need not grant leave to amend when amendment would be futile. 13 DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 188 (9th Cir. 1987). 14 Several considerations weigh against granting Plaintiff leave to amend, including 15 that amendment would be futile, Plaintiff’s prior opportunity to amend his claims, and 16 Plaintiff’s failure to oppose either pending motion. Plaintiff has already amended his 17 complaint once as a matter of course following receipt of Defendants’ initial motions to 18 dismiss, which raised identical challenges as those asserted in the instant motions. (See 19 Doc. Nos. 4, 6.) Defendants’ prior motions afforded Plaintiff notice of the deficiencies in 20 his complaint, which Plaintiff failed to cure through amendment. Additionally, further 21 opportunity for amendment would be futile, as non-judicial foreclosure does not amount 22 to state action and Defendants are private entities. Finally, Plaintiff’s non-opposition is 23 notable. Pursuant to Civil Local Rule 7.1.f.3, the failure to file an opposition “may 24 constitute a consent to the granting of a motion or other request for ruling by the court.” 25 Civ.L.R. 7.1.f.3. For these reasons, the Court declines to grant Plaintiff leave to amend. 26 /// 27 /// 28 /// 7 15cv02701 1 2 3 IV. CONCLUSION For the above reasons, Defendants’ motions to dismiss are GRANTED WITH PREJUDICE. The Clerk of Court is instructed to close the case. 4 5 IT IS SO ORDERED. 6 Dated: April 19, 2016 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 15cv02701

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